Robinhood Crypto, the cryptocurrency division of the US online brokerage Robinhood, received a Wells Notice from the Securities and Exchange Commission (SEC) on May 4. This marks the third cryptocurrency-related company to receive such a notice, following Uniswap and ConsenSys in April, indicating that SEC staff have preliminarily decided to take enforcement action against the company, accusing it of violating securities regulations.
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SEC accuses Robinhood of violating securities regulations
Uniswap and ConsenSys also recently received Wells Notices
In a statement, Robinhood expressed that SEC staff have preliminarily decided to recommend enforcement action against its cryptocurrency division, accusing it of violating securities regulations.
Dan Gallagher, Chief Legal, Compliance, and Corporate Affairs Officer at Robinhood Markets, stated:
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“For years, we have sincerely tried to work with the SEC to improve regulatory transparency, but we are disappointed by the agency’s decision to issue a Wells Notice related to our US cryptocurrency business.”
Shortly after Robinhood’s bankruptcy filing with the cryptocurrency exchange FTX in November 2022, the company received a subpoena from the SEC. The subpoena aimed to provide information on topics such as “cryptocurrency listings, cryptocurrency custody, and platform operations.”
Robinhood Crypto has since made several concessions, including not listing certain tokens or offering products such as lending and staking (which the SEC has classified as securities for other platforms). Additionally, Robinhood has attempted to register a special purpose broker-dealer with the SEC.
Last month, decentralized cryptocurrency exchange Uniswap received a Wells Notice from the SEC. Uniswap founder Hayden Adams expressed disappointment, stating, “The SEC is not committed to creating clear, informed rules, but instead has decided to focus on attacking long-standing, excellent participants like Uniswap and Coinbase while letting bad actors like FTX get away.”
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Uniswap Receives Wells Notice, Founder Vows to Fight SEC to the End
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Consensys, an Ethereum infrastructure developer, also received a Wells Notice from the SEC in April and decided to proactively sue the SEC. The lawsuit revealed that the SEC had been investigating ConsenSys’ product MetaMask for years. ConsenSys claims that regulating ether as a security would jeopardize the US’s ability to use Ethereum and other blockchains. If the value and belief in Ethereum as a decentralized platform were destroyed, it could potentially lead to massive layoffs in the US cryptocurrency industry.
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ConsenSys Sues SEC, Stands up for Ethereum, Highlights Four Reasons Why ETH is Not a Security
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ConsenSys
Robinhood
SEC
Uniswap
Wells Notice
Further reading
Uniswap Discusses Eight Principles of “Good Token Distribution”: Avoid Points, Stay Away from Low-Liquidity Tokens
Uniswap Supports Purchasing Cryptocurrencies with Robinhood Connect, New Users Receive USDC for Trades